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The Consumers are Saved!

I could probably start a blog just featuring ridiculous government licensing practices.  As I have written before, licensing generally has little to do with the consumer, and more to do with protecting current incumbents from competition.  Via Radley Balko, this is one of the uglier examples I have seen of late:

Mary Jo Pletz was really, really good at eBay. But now the former stay-at-home mother and gonzo Internet retailer fears a maximum $10 million fine for selling 10,000 toys, antiques, videos, sports memorabilia, books, tools and infant clothes on eBay without an auctioneer's license.

An official from the Department of State knocked on Pletz's white-brick ranch here north of Allentown in late December 2006 and said her Internet business, D&J Virtual Consignment, was being investigated for violating state laws....

The 33-year-old opened her Internet business in 2004 so she could stay home with her 6-month-old daughter, Julia, who was diagnosed with a hypothalamic hamartoma brain tumor.

She cooperated when told it was illegal and works at dental offices in Allentown, Bethlehem and Lehighton as a hygienist to help pay the bills at home. Julia, whose health stabilized on medication, is enrolled in day care. Pletz also has a son, Douglas, 7.

But the state has not dropped prosecution. It sent Pletz a complaint in April and an amended complaint in December. The complaint says she could be fined $1,000 for each violation of the state law. The April complaint noted 10,000 sales. Pletz and her attorney, Joseph V. Sebelin Jr. of Palmerton, did the math - $10 million in possible fines. The second complaint does not list a number....

Because of the complaint, Pletz worries the state also could revoke her dental hygienist's license, which she earned by attending community college for seven years at night.

"I really wish that they will walk away from that one and prosecute somebody else," said State Rep. Michael Sturla (D., Lancaster), who is chairman of the House Professional Licensure Committee. "There is every reason in the world that if she is found guilty, she should be exonerated," he said.

This latter is the most outrageous of all, and it is a line taken by a number of public officials -- that the concept of prosecuting people who are selling things on eBay is just fine, but they should not have started with someone who has less sympathetic.  Maybe Exxon has an eBay arm.

Sturla has proposed the bill to create the electronic auctioneer's license. The license would require the Internet seller to buy a $5,000 bond for about $40 a year. This would protect consumers, he said.

Bull.  This would protect competitors.  eBay has numerous controls in place to identify problem sellers.

D&J Virtual Consignment had 11,000 feedback comments on eBay and 14 were negative, Pletz said, giving her a 99.9 percent satisfaction rating.

I can say from experience that for some reason they must teach this in government school -- when in doubt, make service businesses get a bond.

This is not unique - Ohio tried to do the same thing.  But why is a person who sells on eBay an auctioneer at all?  Isn't eBay the auctioneer?  If I turn my stuff over to Christies to auction off, setting a reserve price in advance and having them take a sales commission, how is that any different than putting the same stuff on eBay.  In Ms. Pletz case, eBay is earning the auction commission.  She is just taking a retail margin.

Posted on January 31, 2008 at 11:07 AM | Permalink


I'll note that Pletz's 99.9% satisfaction rating is probably just a bit higher than that of the Pennsylvania state legislature.

Posted by: Kyle Bennett | Jan 31, 2008 11:22:29 AM

Horrible story, but is sounds as if she was in fact a consignment house, taking goods from other people and selling them for profit.

Nothing wrong with that at all, but she probably should have had a business license for such. Of course one could argue the finer points of why should one need any license for any unregulated business, or why some businesses are slipped into any regs at all.

Type of Enterprise: Helping others clear out their attics.

Posted by: TC | Jan 31, 2008 5:04:45 PM

This sounds like a gross misapplication of the Auctioneer requirements - she's not the one doing the Auction - EBay is, although if the State law requires consignment houses(if this was what she was doing) to have one, then she's on the hook for it.

This type of missapplication of existing laws seems to happen alot in that area - not too long ago, A guy named Brian Kelly was arrested for "Wiretapping" when videotaping the police. The case was later dropped when it became apparent that it would go badly for them - the wiretapping law specified an "expectation of privacy".

My Suspicion? They're actually trying to get a cut of the action from Ebay, and they're doing it by offering to "compromise" by making a special "E auctioneers" license.

I disagree about licenses to protect existing businesses, for the most part(although it is used often enough to bludgeon the competition of the well connected), it strkes me more as an extortion scheme - Government sees others making money, figures out a way of stealing a piece of the pie.

Posted by: HTRN | Feb 1, 2008 1:31:12 AM

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